Delaware's mortgage market has its own distinct rules — from closing customs to transfer tax structure to the specific down payment programs available through the state's housing finance agency. This guide covers what's genuinely different about buying in Delaware, not just the generic national mortgage process.
Delaware at a Glance
Est. payment: $2,152/mo
Est. payment: $1,983/mo
Est. payment: $2,382/mo
Estimated payments assume 5% down, 6.82% 30-year fixed rate, plus $150/month insurance. Your actual payment will vary by lender, credit score, and specific property tax rate.
How Delaware Closings Work
While not legally mandated, the vast majority of Delaware closings use an attorney due to the state's unique title insurance and transfer tax settlement process.
Transfer tax: 4% total (2.5% state + 1.5% local in most municipalities), typically split 50/50 between buyer and seller — one of the highest transfer tax rates in the nation.
The Delaware Property Tax Quirk You Should Know
Delaware has no state sales tax, which real estate agents sometimes use to imply overall low tax burden — but the 4% transfer tax on real estate specifically offsets much of that advantage for homebuyers. First-time buyers get a partial exemption reducing the tax by up to $2,000.
Delaware's Down Payment Assistance Program
Delaware State Housing Authority (DSHA) Preferred Plus, First State Home Loan
DSHA's Preferred Plus offers down payment/closing cost assistance up to 5% of the loan amount as a 0% second mortgage that converts to a grant after 5 years of continuous residency.
USDA Rural Eligibility in Delaware
Kent and Sussex counties (southern Delaware, including areas near Dover and the beach towns) have significant USDA-eligible rural zones; New Castle County near Wilmington is largely ineligible.
Mortgage Loan Limits in Delaware
| Loan Type | Limit | Down Payment |
|---|---|---|
| Conventional (Fannie/Freddie) | $766,550 | 3–20% |
| FHA (DE) | $766,550 | 3.5% |
| VA (eligible veterans) | No limit (full entitlement) | 0% |
| USDA (eligible rural areas) | No set limit | 0% |
Frequently Asked Questions
While not legally mandated, the vast majority of Delaware closings use an attorney due to the state's unique title insurance and transfer tax settlement process.
Delaware's transfer tax structure: 4% total (2.5% state + 1.5% local in most municipalities), typically split 50/50 between buyer and seller — one of the highest transfer tax rates in the nation. This is typically disclosed on your Closing Disclosure and paid at settlement.
DSHA's Preferred Plus offers down payment/closing cost assistance up to 5% of the loan amount as a 0% second mortgage that converts to a grant after 5 years of continuous residency.
Kent and Sussex counties (southern Delaware, including areas near Dover and the beach towns) have significant USDA-eligible rural zones; New Castle County near Wilmington is largely ineligible.
Sources for This Page
- Freddie Mac PMMS — national rate benchmark
- HUD FHA Mortgage Limits — DE loan limit data
- USDA Rural Development Eligibility — Delaware rural zone verification
- Delaware state Housing Finance Agency — program terms and current DPA availability